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328 56 To Stabilize the Economy, It’s Essential to Stabilize Prices1 July 10, 1989 The most important way to win people’s hearts is to punish bribery and corruption. However, if the economy isn’t stable, if prices increase, or if there’s another round of panic buying, it will be very hard to carry on with our work, and then we will be in dire straits and things will become very dangerous . Therefore a very important task in the second half of this year will be to stabilize the economy by stabilizing prices—they cannot rise any more. When I say the city government should stabilize prices for the second half of the year, I don’t mean “freeze” them—freezing prices won’t work, but we should at least stabilize them. There mustn’t be an all-out race to increase prices or to engage in panic buying—that would be terrible. That’s why the Municipal Bureau of Prices should raise its thinking and policies to a somewhat higher level, be aware of the present situation, and keep prices stable at all costs. After half a year, production and exports will have increased and the situation can change. If there was sudden volatility in prices at the moment, however, we wouldn’t be able to cope. The Bureau of Prices must therefore track and supervise prices every month or even every 10 days during the second half of this year—it must not let up. As for the first half of the year, I’ve already printed and distributed to you the report on deregulated prices compiled by the Municipal Federation of Trade Unions. It shows that the price of decontrolled small commodities rose a lot in this period: soy sauce was originally a little over RMB 0.20 per jin2 and now it’s over RMB 0.50—how can this be? This is the kind of thing that causes us to lose support; moreover, it wasn’t essential for the prices of many of these items to increase—it was due to a lack of supervision and management on our part. The deregulated items in this trade union report account for 60–70% of what we eat, wear, and use, yet the Bureau of Prices didn’t do anything—this 1. This is part of a speech by Zhu Rongji at the 41st mayor’s administrative meeting of the Shanghai municipal government. 2. One jin is equal to 0.5 kilogram. Zhu_Shanghai Years_1987-1991_hc_9780815731399_i-xii_1-620.indd 328 12/26/17 12:01 PM To Stabilize the Economy, It’s Essential to Stabilize Prices 329 is unacceptable! We still have to supervise and manage; if any arbitrary price increases are discovered, they must be dealt with. What should we do? I agree with the following proposals of the Bureau of Prices. 1. Keep Prices Stable Resolutely keep prices stable in the spirit of the Party Central Committee and the State Council. There must be no wavering whatsoever, and no need to worry that enterprises won’t survive—we’ll worry about that next year. Above all, policies and thinking must be very clear. 2. Keep the Price of the “Vegetable Basket” Stable at All Costs Other things are easier to deal with: clothes can last for three years, but we encounter the price of the vegetable basket every day, so it would be terrible if this weren’t stable. People say we win hearts when we focus on the vegetable basket; if we can’t win people’s hearts, it will be because the vegetable basket rose in price, so that’s why we must keep it stable. The problem is, we must also preserve the zeal of the farmers to produce, which is done through the purchase prices for non-staples. If those prices aren’t raised suitably, however, we won’t be able to keep the price of the vegetable basket stable either. So what should we do? A sentence [in the report] suggests: “We ask the fiscal departments to arrange for essential subsidies to stabilize prices of non-staples; otherwise these prices cannot be kept stable.” I think this is the only thing we can do at the moment. We must subsidize so that at least this halfyear can pass by stably. If the situation looks better after the third quarter, we can look at policies again in the fourth quarter. These will be “three-level subsidies ”; if only the city...


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